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July 17: Obama’s Re-election Chances Fall on Gloomy G.D.P. Forecast

By Nate Silver July 17, 2012 7:53 pmJuly 17, 2012 7:53 pm

Tuesday was a bit of an eclectic day for economic and polling news, but there was one data point that had the largest influence on our presidential forecast. That was the latest edition of The Wall Street Journal’s economic forecasting survey, which showed more bearish projections for gross domestic product and other economic indicators. Economists now expect the below-average growth that the economy has been experiencing to continue for quite a while, with G.D.P. growing at a rate of about 2 percent into early 2013. The panel’s previous projections had not been especially bullish, but had been closer to 2.5 percent.

Inflation remains low: in fact, there was no inflation at all in June, as the decline in gas prices offset a modest increase in other goods. This is welcome news for consumers, but it did not immediately help Mr. Obama in our forecast because the model was already giving him the maximum amount of credit for the low inflation rate. (The model does not give “extra” credit to the incumbent candidate when the inflation rate is below 2 percent, since a 2 percent inflation rate is considered optimal by economists.)

There was also data out on industrial production on Tuesday, which showed a rebound in June after a decline in May. Industrial production has generally been fairly robust over the past year, and is one of the more emphatic signs that our economy — however tepid the recovery might be — is at least not in recession right now. However, since the trend in the industrial production numbers had already been favorable (excluding the poor May data point), the new numbers did not shift our model’s economic index much.

On the polling front, there were new polls out in Iowa and New Hampshire that look superficially good for Mr. Obama — he held leads of five points and four points in those surveys. But in both cases, the pollster had shown a larger lead for Mr. Obama before. To some extent, this probably reflects reversion to the mean, especially in the case of the Iowa poll, in which Public Policy Polling had previously given Mr. Obama an implausible 10-point lead.

Overall, Mr. Obama’s chances of winning the Electoral College declined to 66.8 percent in the forecast model, from 68.7 percent on Monday.

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This is an archive of posts from FiveThirtyEight, a blog founded by Nate Silver in 2008 and devoted to rigorous, data-driven analysis of politics, polling, public affairs, sports, economics, science and culture, from August 2010 through July 2013.